Economic prospects of the CIS sources of long term growth

The Economic Prospects of the CIS The Economic Prospects of the CIS Sources of Long Term Growth Edited by Gur Ofer Emeritus Professor of Economics, Hebrew University, Israel and the New Economic School, Moscow, Russia and Richard Pomfret Professor of Economics, University of Adelaide, Australia Edward Elgar Cheltenham, UK • Northampton, MA, USA © Gur Ofer and Richard Pomfret 2004 All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher Published by Edward Elgar Publishing Limited Glensanda House Montpellier Parade Cheltenham Glos GL50 1UA UK Edward Elgar Publishing, Inc 136 West Street Suite 202 Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data The economic prospects of the CIS: sources of long term growth / edited by Gur Ofer and Richard Pomfret p cm Includes bibliographical references and index Former Soviet republics–Economic conditions–Congresses I Ofer, Gur II Pomfret, Richard W T HC336.27.E26 2004 338.947–dc22 2003064351 ISBN 84376 615 Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall Contents vii x xiii List of abbreviations List of contributors Preface and acknowledgments Introduction Gur Ofer and Richard Pomfret Down and up the stairs: paradoxes of Russian economic growth 32 Ksenia Yudaeva, Maria Gorban, Vladimir Popov and Natalya Volchkova Transition and growth in Belarus Marina Bakanova, Lúcio Vinhas de Souza, Irina Kolesnikova and Ivan Abramov 57 Ukraine: the lost decade and the coming boom? Olexander Babanin, Vladimir Dubrovskiy and Oleksiy Ivaschenko 76 Barriers to growth in Moldova Artur Radziwill and Oleg Petrushin Explaining growth in Armenia: the pivotal role of human capital Heghine Manasyan and Tigran Jrbashyan 101 128 Turkmenistan: economic autocracy and recent growth performance Alexandre Repkine 154 The Uzbek paradox: progress without neo-liberal reform Martin Spechler, Kuatbay Bektemirov, Sergei Chepel’ and Farrukh Suvankulov 177 Tajikistan’s growth performance: the first decade of transition Khojamahmad Umarov and Alexandre Repkine 198 Economic growth in Kyrgyzstan Roman Mogilevsky and Rafkat Hasanov 224 10 v vi The economic prospects of the CIS 11 Natural resources and economic growth in Kazakhstan 249 Yelena Kalyuzhnova, James Pemberton and Bulat Mukhamediyev 12 Conclusions Gur Ofer and Richard Pomfret 268 References Index 276 289 Abbreviations ADB AGR AM AMD ARA bcm BET BRB BSSR CEE CEECs CGE CIA CIS CISR COMEX CPI CPSU CST DD DW EBRD ECE EERC EIA EU FDI FERF FIAS FOB FPA FSU Gazprom GDN Asian Development Bank Agriculture Armenia Armenian dram (National currency) Agency for Restructuring Agriculture billion cubic metres ‘Belarus Economic Trends’ Belarusian rouble Belarusian Socialist Soviet Republic Central and Eastern Europe Central and Eastern European countries computable general equilibrium Central Intelligence Agency Commonwealth of Independent States Center for Strategic Studies and Reforms, Chisinau, Moldova Turkmen Commodity Exchange consumer price index Communist Party of the Soviet Union construction Dutch disease Durbin-Watson Coefficient European Bank for Reconstruction and Development Economic Commission for Europe Economics Education and Research Consortium Energy Information Administration European Union foreign direct investment Foreign Exchange Reserve Fund Foreign Investment Advisory Service free on board fixed production assets former Soviet Union Russian (also Soviet) Gas Producing Corporation Global Development Network vii viii The economic prospects of the CIS GDP gross domestic product GKO government short-term bonds GKS GosKomStat, Russian Statistical Bureau GNI gross national income GNP gross national product Goskomstat, GosKomStat, Russian Statistical Agency GRP gross regional product GVA gross value added HBC Hard Budget Constraints HDR Human Development Report HIPC heavily indebted poor country ICOR incremental capital–output ratio IFC International Finance Corporation IFI International Financial Institution IFO international financial organization IMF International Monetary Fund IND Industry IO input–output IT Information Technology ITERA Russian Gas Marketing Company JVs joint ventures LESC legal environment stability coefficient LSMS Living Standard Measurement Study NAR National Academy of Russia NATO North Atlantic Treaty Organization NBER National Bureau of Economic Research NIE newly industrializing economies NMP net material product NSC National Statistical Committee NSS National Statistical Service OAB Oxford Analytica Brief OECD Organization for Economic Cooperation and Development OLS Ordinary Least Square PhD Doctor of Philosophy PIP Public Investment Programme PPI producer price index PPP purchasing power parity PRGF Poverty Reduction and Growth Facility PSAs production-sharing agreements R rouble R&D Research and Development Abbreviations RCA ROP RSFSR SBC SD SER SISI ‘Opinia’ revealed comparative advantage resource-oriented policy Russian Soviet Federation Socialist Republic Soft Budget Constraints Standard Derivation Services de Serviciul Independent de Sociologie si Informatii (SISI) ‘Opinia’ SNA System of National Accounts SOEs state-owned enterprises SU Soviet Union TA technical assistance T-bills Treasury Bills TCO Transport and Communications TE transition economy TFP total factor productivity TRD trade and catering Turkmenstatprognos Turkmenistan Statistical Agency UGSS United Gas Supply System ULIE Ukrainian League of Industrialists and Entrepreneurs UNDP United Nations Development Programme US United States US$ US dollar USSR Union of the Soviet Socialist Republics VA Value added VAT Value Added Tax WB World Bank WP Working Paper WTO World Trade Organization YOY year on year ix Contributors Ivan Abramov, Head of Department, Institute of Economics, National Academy of Sciences of Belarus, Minsk Olexander Babanin, Associate Professor, European University, Kyiv Marina Bakanova, Country Economist, The World Bank, Belarus Country Office, Minsk Kuatbay Bektemirov, Head, Department in the Aral Sea Region Institute for Socio-Economic Research, Uzbekistan Academy of Sciences, Karakalpakstan Branch, Nukus Sergei Chepel’, Researcher, Institute of Macroeconomic and Social Studies of the Ministry of Macroeconomic Statistics, Tashkent Lúcio Vinhas de Souza, Economist, Kiel Institute for World Economics, Kiel Vladimir Dubrovskiy, Director, Center for Social and Economic Research, CASE-Ukraine, Kyiv Maria Gorban, Economist, Center for Economic and Financial Research, Moscow and Economist, European Business Club, Moscow Rafkat Hasanov, Head, Secretariat of the Special Representative of the President of the Kyrgyz Republic on Investment Attraction, Bishkek Oleksiy Ivaschenko, Researcher, Cornell University, Ithaca Tigran Jrbashyan, Managing Director CO, ‘Sed Marsed Investment Consulting’, Yerevan Yelena Kalyuzhnova, Director, The Centre for Euro-Asian Studies, The University of Reading x Index Armenia 130, 137, 147, 150 Kyrgyzstan 235, 238–9 Moldova 27, 102–7, 117, 124–5, 126 Russia 19, 45 Ukraine 92, 94, 95 Uzbekistan 193 demand 147–8 shocks 141, 142, 166, 167 De Melo, M 41, 42, 58, 138, 184, 185 democracy/democratization 9, 22, 26 Moldova 122–3 Russia 33, 37–8, 40, 44, 47, 52–3 Uzbekistan 178 Denizer, C 41 de Souza, V 69 disorganization process Belarus 59, 65, 66 Russia 44, 46, 47, 49, 50, 272 Turkmenistan 156, 158 Djankov, S 70 Dolinskaya, I 249 Dushanbe 206, 209, 212, 214, 216–17, 219–21 Dutch disease 3, 84, 88, 116, 256–7, 259–60 Easterley, W 131, 262 Economic Commission for Europe (ECE) 251, 253 economic freedom 78, 79, 128 economic growth 23–30 Armenia 128–53 Belarus 57–72 Kazakhstan 249–67 Kyrgyzstan 224–48 Russia 32–56 Tajikistan 198–223 Turkmenistan 154–76 Uzbekistan 181–4 economic performance Turkmenistan 154–76 Ukraine 81–90 economic reform (in CIS) 10–23 Economist Intelligence Unit 177 education 2, 3, 6–7 Armenia 27, 128, 129, 132, 1135, 140, 149, 150–52 Kyrgyzstan 225, 241–3, 247–8 Moldova 106 Russia 44, 46, 47 291 Tajikistan 218, 220–21 Uzbekistan 187, 189, 192 electricity industry (Tajikistan) 204 elites 7, 85–6, 97–8 ELTO plant 212 emigration Armenia 137, 143, 150 Kyrgyzstan 239–40, 241 Moldova 106, 123, 126 Tajikistan 28, 215–21, 222 Ukraine 85–6 employment in agriculture (Moldova) 113, 114 in agriculture (Uzbekistan) 188 Armenia 132, 133 Tajikistan 215–21 see also full employment; unemployment energy sector Armenia 27, 133, 134 Belarus 25 Kazakhstan 29, 254–67 Kyrgyzstan 231, 232 Moldova 26, 108, 116–17 Russia 24, 38, 272 Ukraine 25, 26, 76, 77, 82–4, 86–90, 94–6, 99, 270 Uzbekistan 185 enforcement see law enforcement enterprise reform (Ukraine) 78 Enterprise Survey 50, 118, 120, 121 Ergashev, B 180, 188 Eurasian Union 273 Eurobonds 88 European Bank for Reconstruction and Development (EBRD) 191, 192, 236 Enterprise Survey 50, 118, 120, 121 transition indexes 19–20, 22, 60, 62, 66, 102 Transition Report 12, 14, 20, 78 European Comparison Programme 251 European Union 24, 33, 40–42, 67–9, 73, 97, 101–2, 103, 122, 191, 236 exchange rate 269 Armenia 129, 134, 137, 140, 141 Belarus 59, 62, 63 Kazakhstan 256, 257, 260 Kyrgyzstan 238 Moldova 107 292 The economic prospects of the CIS Russia 35, 45, 49, 51 Turkmenistan 169, 172 Ukraine 95 Uzbekistan 194 expectation hypothesis 34–5, 41 exports Armenia 130, 139, 141 Belarus 60, 63, 67–9, 70–71 Kazakhstan 249, 255–6, 259, 264 Kyrgyzstan 226, 227, 231, 232, 247 Moldova 108, 111 Russia 44, 46, 47, 49, 51–2, 270 Tajikistan 212, 213 Turkmenistan 158–60, 161–2, 166, 169, 270 Ukraine 88, 95 Uzbekistan 185, 195 extensive growth model 6, 104 factors of production Belarus 67 Kyrgyzstan 226 Moldova 103 Uzbekistan 182 Falcetti, E 271 Filer, R 125, 181 financial institutions 22, 29 financial markets (Kyrgyzstan) 244 financial shock (Armenia) 141 fiscal policy 269 Armenia 136 Belarus 62, 64 Moldova 106–7, 124 Fischer, S 29, 32, 45, 101, 102, 131 fixed production assets (FPAs) 233 Fokin, V (Ukrainian PM) 86 foreign aid 136, 235–9, 244 foreign direct investment (FDI) 19 Armenia 137, 147, 149–50 Belarus 62, 65, 73 Kazakhstan 256, 259 Kyrgyzstan 231–2, 235, 247 Moldova 125 Russia 25, 35, 45, 54 Tajikistan 207, 208 Turkmenistan 167 Ukraine 81, 88 Uzbekistan 194 Foreign Exchange Reserve Fund 171–2 foreign trade see exports; imports; trade formal institutions 7–8 Frienkman, L 140 Frye, T 81 full employment 154, 239 Gaddy, C 49 Gaidar, E 211–12 Garibaldi, P 45 gas industry Belarus 65 Kazakhstan 29, 249, 254–5, 256, 258, 260–67 Russia 117, 160 Turkmenistan 27–8, 154, 158–62, 166, 167, 170–71, 173, 175 Ukraine 92 Gazprom 117, 160 Gelb, A 41 Georgia 11, 22, 273 Gorbachev, M 10, 24, 35, 38, 39, 178 Goskomimushestvo 190 Goskomstat 2, 43, 47–8, 54 government effectiveness (indicators) 21–2, 41 grabbing hand 18, 76, 117 Russia (collapse) 35–42 state capture 9, 26, 27, 81, 85, 117, 119 Turkmenistan 168–74 Ukraine (state interference) 91–2 Uzbekistan (size) 189–92 Government Short-Term Bonds (GKOs) 50, 64, 190 ‘grabbing hand’ 18, 76, 117 gradualism/gradual reform 15–16, 274 Belarus 271 Moldova 124 Turkmenistan 271 Uzbekistan 178, 271 gross domestic product (GDP) 3, 12, 15 Armenia 128–9, 136, 138–41, 143–9 Belarus 58–9, 61, 62, 66–7, 72, 272 Kazakhstan 251–2, 267 Kyrgyzstan 225–6, 227, 229, 230, 233–4, 236–7, 243–4 Moldova 26, 102, 107–9, 110–11, 117, 121 Index Tajikistan 198–9, 202, 205, 206, 222 Turkmenistan 154, 161, 166, 172 Ukraine 82, 87, 88–9, 96, 98 Uzbekistan 181–4, 189–90 gross industrial product 227 gross national income (Moldova) 111 gross regional product 43–4, 45, 47–8 gross value added (Armenia) 146 Grubel–Lloyd intra-industry trade coefficient 230 Guriev, S 50–51, 70 Gutman, P 143 GUUAM grouping 273 Gylfason, T 84 Haizhou, H 51 Hanousek, J 181 hard budget constraints 17, 18, 23 Ukraine 89, 90, 95, 100 health care 6–7, 187, 189–90, 225, 247 heavy industry Hellman, J 81, 117, 118, 119, 120–21 Heritage Foundation 79 Heybey, B 185 hidden economy (Armenia) 142–3 highly-indebted poor countries 250 historical hypothesis 33–4, 41 Hoekman, B 70 human capital 7, 29, 274 Armenia 27, 128–53 Kazakhstan 249, 260, 262 Kyrgyzstan 241–3, 247 Moldova 104, 106, 116, 121, 126 Russia 38, 39, 41 Tajikistan 215–21, 222 Ukraine 26, 83, 86, 98, 99, 100 Human Development Index 6, 126, 128, 129, 187, 245 Human Development Reports 129, 130 hydrocarbon sector 250, 253–4, 260–67 hydropower (Kyrgyzstan) 232 hyperbolic discounting 266–7 hyperinflation 11, 16 Armenia 133, 136 Moldova 106, 108 Ukraine 76, 86–7 Ickes, B 49, 51, 70 imitation-experimentation paradigm 33–4 293 import-substituting policies 28, 63, 77, 155, 194, 196, 212 imports Armenia 130, 139 Belarus 60, 63, 67–8 Kazakhstan 257, 259 Kyrgyzstan 226 Tajikistan 212, 213–14 Turkmenistan 169 Ukraine 77, 88, 89 Uzbekistan 194, 196 incentives (Moldova) 116–24 income levels 1, 2, 13, 19, 245 Armenia 128–9, 137 Belarus 25, 58 Russia 25 Tajikistan 28 Uzbekistan 186–7 incremental capital-output ratio 193 indicative planning 243 industrial sector Armenia 144–7 Belarus 58–60, 67–8 Kazakhstan 251–2 Kyrgyzstan 225, 226 Russia 44, 45, 46, 51, 53 Tajikistan 200–205, 215, 216 Turkmenistan 156–62, 166–7 Ukraine 76–7 Uzbekistan 179–80, 182, 184 industrial structure 3, Belarus 25 Russia 24, 42–4 Tajikistan 202–5 Ukraine 77, 82–3 industrialization 3, Kyrgyzstan 225 Moldova 103, 105, 109 Uzbekistan 177, 178, 194 see also de-industrialization; overindustrialization inequality, poverty and 18–19, 247 inflation 7, 10, 11, 14, 16, 22, 23 Armenia 129, 133, 134, 136, 143 Belarus 60, 62–3, 66, 67–8, 272 Kyrgyzstan 227, 238, 244, 247 Moldova 102, 106, 208 Russia 36, 45, 50 Tajikistan 200, 211, 214 Turkmenistan 169, 172, 272 294 The economic prospects of the CIS Ukraine 76, 77, 86–7 Uzbekistan 179, 181, 191, 271 see also hyperinflation informal institutions 7–8 infrastructure 5, 6, 17 Armenia 133 Kyrgyzstan 235, 238 Moldova 104 Turkmenistan 155 Uzbekistan 196 initial conditions 1, 2–4, 23, 268–9 Armenia 138–40 Belarus 57, 58–60, 72, 269 Moldova 101, 269 Russia 35, 42–54, 269 Tajikistan 269 Ukraine 76–7, 269 inputs 6, 10, 164–5, 226 institutional capital 28, 177 institutional environment (Ukraine) 81, 97–9 institutional failure (Moldova) 116–24 institutional memory (Ukraine) 83–4 institutional policy (Armenia) 152–3 institutional reforms (Tajikistan) 205–15 institutions financial 22, 29 formal/informal 7–8, 120–23 Kyrgyzstan 228, 243–5 Inter-American Development Bank 77 interest rates Kyrgyzstan 244 Tajikistan 210 Ukraine 94 Uzbekistan 193 International Finance Corporation Survey 87 international financial organizations (IFOs) 86, 97, 136, 247, 270 International Monetary Fund 102, 136, 255, 257 Country Reports 105, 155, 158, 172 International Financial Statistics 105, 107 Kyrgyzstan 227, 236, 239 Poverty Reduction and Growth Facility (PRGF) 239 staff estimates 170, 172 Uzbekistan and 177, 183, 185–6, 192, 193 World Economic Outlook 41 investment Armenia 132, 144, 147, 149 Belarus 62, 66, 73 Kazakhstan 256 Kyrgyzstan 234–5, 236, 237 Moldova 103, 104 Russia 35, 52–4 Tajikistan 200, 212–13 Turkmenistan 154, 167, 169, 171, 173–4, 175 Uzbekistan 177, 190, 192–4, 195–6 see also foreign direct investment invisible hand 18 Islamov, B 178, 179 ITERA 161 job creation (Ukraine) 93–4 job destruction (Ukraine) 93–4 joint-stock companies 102, 112, 124, 179 joint ventures 70, 71–2, 184, 194 Kalyuzhnova, Y 252, 254 Kara-Keche coalmine 233 Kara-Kum Canal 162, 164 Karimov, I (Uzbek President) 178, 179 Kaufmann, D 22, 35, 41, 123 Kazakhstan 9, 10, 11, 29, 249, 268–70 development (first decade) 250–54 future prospects 273 hydrocarbon sector wealth 260–67 impact of energy 254–60 policy evolution 270 Kazakhstani Oil Fund 260–61, 262 Khrushchev, N 178 Kinakh, A 91, 96 Knack, S 122, 123 Koen, V 101, 106, 186 Kolesnikova, I 70 kolhoz 112, 115, 124 Kornai, J 81 Kravchuk, L (Ukraine President) 86 Kremer, M 44, 59 Krugman, P 269 Kuchma, L (Ukraine President) 91, 92 Kulyab airport 204 Kumtor gold mine 227, 232, 235 Kushnirsky, F 138 Index Kyrgyzstan 16, 28–9, 224, 268 development in Soviet period 225 future prospects 273 long-run economic growth 232–46 natural resources 270 policy evolution 270–71, 272 transition period 225–32 Kyrgyzglavenergo 243 labour Armenia 130–31, 132, 133 Belarus 70–71 Kyrgyzstan 239–41, 242, 244, 247 Tajikistan 215–21, 222 Uzbekistan 182–3 see also human capital labour market Kyrgyzstan 244 Tajikistan 215–21, 222 Ukraine 93–4 Laibson, D 266 land Armenia 136 Kyrgyzstan 245 Moldova 108–16, 124, 125, 126 Turkmenistan 170 Ukraine 99 law enforcement Moldova 120–23, 124, 125–6 Russia 34, 40 Ukraine 92 legal environment stability coefficient (LESC) 228, 229, 230 legal transition (Russia) 35–42 legislation Kyrgyzstan 228–30 Moldova 120–23, 124 Russia 40 Tajikistan 199 Ukraine 78, 89–90, 91, 95 Uzbekistan 178 see also law enforcement; rule of law Levine, R 253 liberalization 15, 16, 23 Armenia 136 Belarus 60, 69, 72, 73 Moldova 101, 106, 118 Russia 24–5, 35–6, 41–2, 44, 46, 48, 52–4, 270–71 Uzbekistan 179, 185–6 life expectancy 2, 3, 129, 187, 245 light industry 70, 167 liquidity crunch 50 living standards Belarus 58 Kyrgyzstan 240, 243, 245 Moldova 104 Tajikistan 198, 210, 212 Ukraine 93–4 Uzbekistan 178 LSMS household survey (1998) 243 Lunina, I 87 McGuire, M.C 173, 174 macro rents 84, 88, 89, 99, 100 macroeconomic policies Kyrgyzstan 247 Russia 42–54 macroeconomic stabilization 271 Armenia 138 Kyrgyzstan 225–7, 236, 238 Tajikistan 199–200, 222 Maddison, A 13 mahallah system 189 Manaenkov, D 54 manufacturing sector 2, 3, 23 Armenia 27 Belarus 25 Kazakhstan 256, 257, 259 Kyrgyzstan 230, 231 Turkmenistan 28 Ukraine 99 Marchenko, G 261 Marin, D 49 market 9, 17–18 Armenia 138–40 Belarus 62 Kyrgyzstan 243–5 Russia 40 Tajikistan 205–15 Markosyan, V 134 Martin, R 181 Masol, V 86 Michalopoulos, C 58 Micklewright, J micro rents (in Ukraine) 84, 88–90 migrant labour (Tajikistan) 215–21 Milanovic, B 18 military sector 6, Armenia 27, 133 295 296 The economic prospects of the CIS Kyrgyzstan 225 Russia 40, 42 Turkmenistan 156 Ukraine 77, 82 Mill, J.S 123 Moldova 9, 11, 16, 22, 26–7, 268 future prospects 273 incentives and weak state 116–24 initial conditions 101, 269 Land Code 112 natural resources 270 output collapse 103–7 policy evolution 271 reform failures 101–3 terms-of-trade shock 108–16 monetary policy 11, 23 Armenia 136, 143 Belarus 62, 63, 72–3 Moldova 108, 124 Russia 49, 50 Uzbekistan 179 Mongolia 16 Mukand, S 33, 38 Murrell, P 179, 185 Nagorno-Karabakh conflict 10–11, 27, 133, 136, 138 National Bank of Kazakhstan 261 National Bank of Kyrgyzstan 228, 239 National Bank of Moldova 102 National Bank of Ukraine 85 national identity 9–11, 122, 123 national income 2, 3–4 Armenia 131, 136, 138 Kyrgyzstan 246 Uzbekistan 186 National Oil Fund (Kazakhstan) 260–61, 262, 265 natural resources 19 Armenia 268, 270 Kazakhstan 3, 29, 249–67, 268–70 Kyrgyzstan 232–3 Moldova 270 Russia 3, 35, 38, 41, 42, 45, 49, 52, 268, 269, 270 Tajikistan 270 Turkmenistan 3, 154, 172–6, 268, 269, 270 Ukraine 26, 84, 268, 269, 270 Uzbekistan 3, 268 see also gas industry; oil industry; water resources Nelson, R 81 net material product Armenia 130, 132–3 Belarus 59 Kazakhstan 251 Niyazov, S (Turkmen President) 154, 162, 173, 174, 175–6 nomenklatura 26, 76, 85, 99 non-state-owned firms (Tajikistan) 28, 208, 209 North, D.C 5, 7, 8, 9, 81, 101 North Atlantic Treaty Organization (NATO) 10, 24, 101 Nuti, D.M 59 Ofer, G 2, 5, 22, 101 oil industry Belarus 65 Kazakhstan 29, 249–50, 254–67 Russia 52 Turkmenistan 27–8, 154, 167, 170–71 Olson, M 122, 123, 173, 174 Organization for Economic Cooperation and Development (OECD) 101 organized crime 45, 46, 48, 178 Orlowski, L 59 output Armenia 130–31, 132–3, 136 Belarus 57, 60–61, 63, 66, 69 Kazakhstan 251–2, 257 Kyrgyzstan 226, 245–6 Moldova 103–7, 109–10 Russia 51 Tajikistan 198–205, 222 Turkmenistan 154–65, 166, 174–5 Ukraine 88 over-industrialization Moldova 105 Ukraine 76, 77, 82–3 Uzbekistan 185 Paris Club 29, 239 Partnership and Cooperation Agreement 102 paternalism (Ukraine) 85–6, 87 Peace Agreement (Tajikistan) 222 Index perestroika 35–6, 178 permanent income rule 264, 265, 266 Petrov, N 44, 52 physical capital Kazakhstan 260 Kyrgyzstan 233–5, 245–6 Moldova 104, 106 physical economy Pisani–Ferry, J 59 Pistor, K 40, 41 Pivdenmash Missile Plant 82, 91 Poland 17, 23, 25, 38, 256 policy evolving framework 270–72 see also fiscal policy; macroeconomic policies; monetary policy political instability/violence 21–2 political leadership 10, 11 political transition (Russia) 35–42 politicians (in Russia) 38–9, 54 Polterovich, V 34 Pomfret, R 172, 179, 249 Popov, V 15, 32, 33, 37, 43, 45, 50, 140, 184, 185–6, 190 population Armenia 129, 149 Belarus 61 Kyrgyzstan 224, 239–40 republics of USSR 2, 3, Tajikistan 198 Turkmenistan 154 Uzbekistan 188 Portes, R 156 poverty 2, 18–19 Armenia 137 Kyrgyzstan 239, 245, 247 Tajikistan 217 Poverty Reduction and Growth Facility (PRGF) 239 price 6, 11, 16 Belarus 58–9, 60, 61 consumer price index 14, 68, 227 relative 22–3 signals 5, 15 Turkmenistan 169, 170, 171, 175–6 Uzbekistan 180 volatility (Kazakhstan) 265 price liberalization 17, 271 Armenia 136 297 Belarus 60 Kyrgyzstan 243 Moldova 101, 108 Russia 35, 36 Tajikistan 214, 222 Ukraine 78, 95 Uzbekistan 179, 185 prisoners’ dilemma (incentives) 117 privatization 9, 15, 16–17, 271 Armenia 134, 136, 147 Belarus 19, 25, 60, 62, 69–71, 72 Kyrgyzstan 235 Moldova 19, 102, 106, 112, 125, 126 Russia 35, 36, 54 Tajikistan 200, 205, 207–12, 214, 222 Turkmenistan 19, 169–70 Ukraine 78, 80, 95, 96, 97, 100 Uzbekistan 19, 179, 190, 196 procurement prices 170, 171, 180 producer price index (PPI) 43 product markets (Kyrgyzstan) 243–4 production chains 11 disorganization process see disorganization process –sharing agreements (PSAs) 160, 167 see also factors of production productivity (definitions) 274 profitable enterprises 200, 201 property/property rights 8, 9, 17 Moldova 119–20 Russia 33, 36, 45 Turkmenistan 154 Ukraine 81, 90 Uzbekistan 194 Public Investment Programme (PIP) 234–5, 236, 237 purchasing power parity (PPP) 13, 19, 58, 128–9, 245 Putin, V 24, 54, 272 Rahimov, E 189 RECEP (Russia) 54 recession 10, 11 transformational (Armenia) 136–52 regulatory quality/burden 21, 22 Renelt, D 253 rents/rent-seeking 8, 9, 269 Belarus 63 Kazakhstan 29, 249 298 The economic prospects of the CIS macro 84, 88, 89, 99, 100 micro 84, 88–90 Moldova 27, 106, 112, 116, 119, 125 Russia 33, 36, 37, 41 Turkmenistan 28, 173 Ukraine 26, 77, 81–4, 86–90, 94, 98–9, 270 research and development 5, 80, 152 resource-oriented policy (Ukraine) 83, 89, 90, 97–8 resource allocation 11, 15, 16, 36 Kazakhstan 259 Moldova 104 Turkmenistan 173 Ukraine 82 resources see natural resources retail sector (Tajikistan) 205, 210–11, 218 Rodrik, D 33, 38 Roland, G 10, 33, 34, 59, 156, 179, 185 rouble 24, 51, 140, 141, 211 Belarusian (BRB) 60, 62 Tajik 200 rouble zone 11, 106, 179 rule of law 21, 22, 24, 271 Moldova 125 Russia 33, 34, 37, 38, 40 Uzbekistan 186 ruralization (Tajik economy) 215–21 Russia 24–5 future prospects 273 growth determinants 32–5 initial conditions 35, 42–54, 269 natural resources 3, 35, 38, 41–2, 45, 49, 52, 268, 269, 270 policy evolution 270, 271, 272 political transition 35–42 Russian Soviet Federation Socialist Republic 39, 69, 86, 173, 198 Ryzhkov, N 44 Sabluk, P 96 Sachs, J 84 Sahay, R 32, 45, 101 savings Armenia 133, 144, 147 Belarus 73 Kazakhstan 260–61 Kyrgyzstan 235, 247 Uzbekistan 192, 196 Schankermann, M 81, 117–21 secessionist movements 10–11 Selowsky, M 181 services sector Armenia 144–6, 153 Belarus 58 Kazakhstan 253, 259 Kyrgyzstan 226, 227 Tajikistan 201, 205 Uzbekistan 182 shadow economy 45, 46, 121, 190 Shcherbytsky, V 85 Shleifer, A 35, 38, 45, 81, 84 Shmelev, N 140 shock therapy 16, 36, 39, 271, 274 Armenia 133, 140–44, 153 shuttle trade 28, 191, 194, 205, 210 Shygayeva, T 96 Sirazhiddinov, N 180, 188 SISI 122 smuggling 117, 243 social contract (Ukraine) 81 social services 7, 16 soft budget constraints 15, 269 Belarus 64–5, 72 Moldova 102, 117 Ukraine 81, 84, 86, 88–9, 92–3, 95 Solidarity 38 Solow model 135 som (Kyrgyzstan currency) 227, 236–7 Sonin, K 33 soum (Uzbek currency) 179, 194, 196 Soviet Union 178, 225 republics of (background data) 1–10 Spechler, M.C 179 Spitak earthquake 138 stabilization 15, 23 Armenia 136, 138, 143, 153 Belarus 67 Kazakhstan 260–61 Moldova 104, 106–7 see also macroeconomic stabilization Stalin, J 7, 85 start-ups 69, 72, 100, 118, 125 state-owned enterprises Belarus 25, 62, 64–5, 66–9, 70–73 Ukraine 77, 91 state capture 9, 26–7, 81, 85, 117, 119 State Planning Committee (USSR) 234 State Property Administration 190 Index Steinberg, D 42 Stock Exchange (Moldova) 102 structural reforms Armenia 136, 138, 152 Belarus 62, 64–5, 67 Kazakhstan 29 Moldova 112 Russia 271 Tajikistan 198–205 Ukraine 78–80, 81 subsidies 3–4, 11, 25, 154, 177, 179 supply shock (Turkmenistan) 166 Suvankulov, F.S 191 TACIS programme 51, 52, 191 Tajik roubles 200 Tajikistan 28, 162, 163, 268 future prospects 273 initial conditions 269 market/institutional reform 205–15 natural resources 270 output 198–205 policies 222–3, 271 unemployment and migration 215–21 Tajiktextilmash 212–13 Tarr, D 2, 58, 59 taxation 22–3 Armenia 143, 144–5 evasion 117, 122 Moldova 121–2 Russia 44–5, 46, 47, 54 Tajikistan 213–14 Turkmenistan 171, 172 Ukraine 81, 91, 92, 95 Uzbekistan 191–2 VAT 91–2, 146, 171, 191, 192, 214 technical assistance 136, 237 technology 5, 6, 133, 134, 152 telecommunications 179, 232–3 tenge (Kazakhstan currency) 257 Tengiz oil field 260 terms of trade 2, Armenia 140 Belarus 25, 59 Kazakhstan 267 Moldova 26, 102, 108–16 Ukraine 88 textile sector 162, 163, 165, 167–8 total factor productivity 268–9, 274 299 Armenia 27, 131–5, 136 Kazakhstan 252 Kyrgyzstan 245–6 Moldova 105–6 Uzbekistan 183 trade Armenia 133, 136–9, 140–41, 144–6 Belarus 58–9, 62–6, 67–9 Kyrgyzstan 229–32 Moldova 104, 125 subsidies 3–4, 11, 25 Tajikistan 201, 205, 210–14, 218 Uzbekistan 194–5 see also exports; imports; shuttle trade; terms of trade transaction costs 5, 8, 165, 213, 222 TransCaspian pipeline 160–61, 162 Transnistria 101, 103, 122, 125 transplant effect 34 transport Armenia 138–9, 144–6 costs 49, 138–9, 165, 194, 232–3 Kyrgyzstan 232–3, 235 Tajikistan 201, 204 Turkmenistan 156, 157, 165–6 Ukraine 80 Uzbekistan 194 Treasury Bills (T-bills) 88, 94 Treisman, D 45 Turkmenistan 10, 16, 27–8 economic performance 154–65 economic recovery 166–8 future prospects 273 government controls 168–74 natural resources 3, 154, 172–6, 268, 269, 270 policies 174–6, 271, 272 Turley, J 261 Tymoshenko, Y 96 Ukraine 4, 9, 11, 16, 25 crisis (1998) 94–7 future prospects 273 growth potential 97–9 identification of problems 81–90 initial conditions 76–7, 269 natural resources 26, 84, 268–70 policies 270, 271 reforms (summary) 78–81 transition patterns 90–94 300 The economic prospects of the CIS Ukrainian League of Industrialists and Entrepreneurs (ULIE) 91, 96 Ukrspetsfin 92–3 unemployment Armenia 137, 143 Belarus 61 Kazakhstan 29, 252 Kyrgyzstan 239, 240, 244, 245 Tajikistan 215–21 Ukraine 92–3, 99 Uzbekistan 187, 188 United Energy Systems 92 United Gas Supply System 159 United Nations 6, 126, 128–9, 187, 236, 237, 245, 251, 253 urbanization 6, 104 Uzbekistan 10, 23, 28, 177 agriculture 188–9 capital investment 192–4 comparative analysis 184–7 fiscal development 189–92 foreign trade policy 194–5 future prospects 273 growth record 181–4 legacy of Soviet period 178 natural resources 3, 268 policies 178–80, 271–2 VAT 91–2, 146, 171, 191–2, 214 Verdier, T 10, 33–4, 59, 156, 194 vertical integration 156 Vincetz, V 87 virtual economy theory 49 Vishny, R 35, 38 Volga-Don Canal 165 wages 6, Belarus 61, 62 Kyrgyzstan 244 Tajikistan 198 Turkmenistan 154, 168, 172 Ukraine 93–4 Uzbekistan 180, 186, 187 Warner, A 84 Washington Consensus 15, 29, 177, 272 water resources Turkmenistan 154, 162, 164, 172, 174 Uzbekistan 188, 196 Wegerich, K 180 wheat production 170, 171, 180 wholesale sector 205, 210 Winter, S 81 Woodruff, D 50 working hours (Kyrgyzstan) 239–41 World Bank 2, 18, 21–2, 81, 83, 102, 136, 139–42, 180, 184–8, 192, 194, 235, 236, 243 World Development Indicators 130 World Trade Organization 16–17, 97, 231, 273 Yeltsin, B 24, 36, 38–9, 44, 272 Young, A 269 Yushchenko, V 26, 80, 92, 94–5, 96 Zak, P 122, 123 Zettlemeyer, J 32, 185 Zhuravskaya, E 37 ... The Economic Prospects of the CIS Sources of Long Term Growth Edited by Gur Ofer Emeritus Professor of Economics, Hebrew University, Israel and the New Economic School, Moscow,... book is available from the British Library Library of Congress Cataloguing in Publication Data The economic prospects of the CIS: sources of long term growth / edited by Gur Ofer and Richard Pomfret... further development and for long- term growth Some of them are supportive and others may provide a hindrance to future economic growth We come back to some of them below The second aspect of the